LPA Asia Smart News

Through this newsletter, we offer you a regular selection of legislative and judicial decision insights prepared by LPA lawyers from its 4 Asian offices as well as some recent news from our teams.

LEGAL INSIGHTS IN ASIA

Hong Kong
Hong Kong considers introduction of re-domiciliation regime

China
A Major change in Chinese Trademark Law on the horizon

Singapore
New Bill to strengthen measures against misuse of companies

Japan
New cookie regulation in Japan

OUR LATEST DEAL

NEWS FROM LPA

---

LEGAL INSIGHTS IN ASIA

Hong Kong considers introduction of re-domiciliation regime

Earlier this year, the Hong Kong Government completed a public consultation on the introduction of a company re-domiciliation regime (the “Regime”).  Its goal is to attract more foreign businesses to Hong Kong by allowing non-Hong Kong companies to move their domicile to Hong Kong while maintaining their original rights and obligations, assets, contracts etc. The bill to approve the new scheme is expected to be submitted to the Legislative Council in 2023/2024.

Lack of a re-domiciliation mechanism in Hong Kong

Currently, there is no legal framework to re-domicile an overseas company in Hong Kong. A foreign company intending to change its place of incorporation to Hong Kong must therefore undergo a complex and cumbersome process consisting of the winding-up of the original entity, the establishment of a new one in Hong Kong and the transfer of all the assets, rights, obligations, liabilities, contracts etc. from the original entity to the newly set-up Hong Kong company.

Proposed Regime

The proposed Regime will allow companies domiciled abroad to move their place of incorporation to Hong Kong while maintaining their legal continuity. This will significantly reduce the cost and procedural complexity as compared to the current regime.

The Registrar of Companies (the “Registrar”) will be in charge of approving applications for re-domiciliation.  The proposed criteria to be met by a company seeking re-domiciliation in Hong Kong are that:

1. it has complied with its local legal requirements regarding the re-domiciliation;
2. it will be re-domiciled in Hong Kong under the same or substantially the same type of company as in its place of incorporation;
3. its first financial year has been completed;
4. it complies with Hong Kong’s legal requirements for the incorporation of companies;
5. it will not be used for any purpose which is unlawful, contrary to public interest or a danger to national security;
6. it makes the application in good faith and not with the intent of defrauding its creditors;
7. if its members are not required to consent to the re-domiciliation under the laws of its jurisdiction of incorporation, at least 75% of its members have given their consent at a member’s meeting for which at least 21 days’ notice was given;
8. it is able to pay its debts as they fall due during the 12 months following the application date; and
9. it is not subject to any proceeding for liquidation, winding-up or receivership or any ongoing or pending compromise or arrangement.

No economic substance test is proposed.

Upon a successful application, the applicant company will be registered in the Companies’ Register and be issued a certificate of re-domiciliation.  The applicant then has 60 days to provide the Registrar with evidence of de-registration in its original place of incorporation.  If it fails to do so, the re-domiciliation process will be terminated.

Impact

While the Regime that will be finally adopted may differ in certain aspects from the current proposal, the introduction of any re-domiciliation scheme in Hong Kong will lower the hurdles for foreign companies wishing to re-domicile to Hong Kong.  Hong Kong’s competitive position as an investment destination will be improved by offering an inexpensive re-incorporation procedure on a par with that of other common law jurisdictions.

Erik Leyssens | Camilla Venanzi

 

A Major Change in Chinese Trademark Law on the Horizon

In early 2023, the National Trademark Bureau sought public input on the draft amendment to the 2019 Trademark Law. While the final version hasn’t been published and is still undergoing the legislative process, it’s clear that this amendment will bring significant changes to the structure of the Trademark Law and introduce new concepts.

Anti-Malicious Registration

For the first time, the draft defines malicious registration, targeting the following behaviors: 1) applying for numerous trademark registrations without the intent to use them; 2) applying for trademark registration through deception or other unfair means; 3) seeking the registration of a trademark that is detrimental to the State’s or the public’s interests or has other significant adverse effects; 4) violating other prohibitive provisions, intentionally infringing on the rights of others, or pursuing illegitimate gains.

In addition to existing restrictions, the draft specifies conditions for trademark registration to prevent malicious applications. Trademarks that violate public order and good customs, use known Chinese geographic names, or consist only of generic names, graphics, models, technical terms (lacking distinctiveness) cannot be registered. It’s also expressly forbidden to use any trademark that i) resembles existing traditional cultural symbols (unless authorized), ii) contradicts core socialist values or harms Chinese culture, or iii) copies, imitates, or translates well-known trademarks.

The draft introduces an enforced transfer procedure, allowing the true owners of trademarks registered in bad faith by others to request a direct transfer, reducing the time and cost of protecting their rights.

Regular Reporting System

Another noteworthy change is the “5-year report” system: trademark owners must report the use of their registered trademarks to the Trademark Bureau every five years. Failure to do so may result in the forfeiture of exclusive rights to those trademarks. While this increases obligations for trademark owners, it helps clear trademarks not in use for an extended period, freeing up registration resources and improving the success rate for new trademark registrations.

Other Updates

The draft suggests the possibility of withdrawing applications, giving trademark owners autonomy in deciding whether to proceed with the application or review process, without waiting for a lengthy review period. It also enhances the definition of “use,” prompting trademark owners to gather evidence meeting the required standards to defend their registered trademarks from revocation. Moreover, trademarks causing harm to consumers or having a negative social impact can be revoked by the Trademark Bureau proactively within its authority.

Registering and protecting your trademark is crucial for foreign investment in Mainland China, and this draft amendment offers trademark owners more robust protection. It reflects the Chinese government’s commitment to establishing a safer legal environment.

Estelle Chen | Fanny Nguyen

 

New Bill to strengthen measures against misuse of companies

In order to provide stronger oversight to weed out illicit corporate activities, Singapore has adopted a whole-of-government approach to combat money laundering and terrorism financing.

Under the proposed Corporate Service Provider Bill (the “Bill”), targeted to be passed in early 2024, the proposed legislative amendments seek to address the risks presented by the misuse of nominee arrangements in the creation of shell companies to facilitate money laundering and require individuals who act as nominee directors, by way of the provision of services in exchange for a fee or an award, to be qualified persons.

To force corporate service providers (“CSPs”) and their senior management to implement such measures, they will be subject to enhanced penalties for breaches of their anti-money laundering and countering the financing of terrorism (“AML/CFT”) obligations, especially in connection with their appointment of nominee directors.

Proposed Amendments to Companies Act 1967 (“Companies Act”)

In order to align government bodies and their regulations with the proposed provisions of the Bill, there are also proposed legislative amendments to other acts, such as the Companies Act. The proposed legislative amendment to the Companies Act is to require CSPs to register with the Accounting and Corporate Regulatory Authority (“ACRA”) to disclose their nominee status, as well as the identity of their nominators. Upon disclosure to ACRA, the nominee status of the director/shareholder will be made publicly available.

At this stage, neither the Singapore Parliament nor ACRA have definitively stated whether the nominee status of shareholders or directors will be reflected in the ACRA business profile of the company. While it is possible that such information will only be reflected in a separate register disclosed only to ACRA (like the register of controllers), the companies currently utilising nominee shareholder or nominee director arrangements should be prepared for the eventuality that the nominee status (as well as the identities of the nominators) of its shareholders or directors will become much more accessible.

Corporate Service Providers Bill

The Bill proposes, inter alia, to impose an obligation on CSPs to implement a group-wide AML/CFT policy requiring their branches and subsidiaries in Singapore or elsewhere to have a group policy to mitigate their AML/CFT risks. In addition, CSPs will be required to conduct the screening of their customers against prescribed sources of information (i.e. the relevant United Nations lists and Ministry of Home Affairs lists), and to perform risk assessment on their customers.

While the specific measures outlined above may be conducted by the CSP without the involvement of its clients, companies currently engaging CSPs in Singapore should take note that their respective CSPs may impose more stringent KYC requirements in the coming months in anticipation of the passing of the CSP Bill.

Li Ke Cheng | Bérengère Roig

 

New cookie regulation in Japan

The use of cookies in Japan was initially primarily regulated by the Act on the Protection of Personal Information. To enhance user protection against retargeting practices, the Telecommunications Business Act was amended to establish new obligations regarding the processing of cookies, effective as of June 16, 2023.

1. Businesses subject to the new cookie regulation

As per Article 22-2-27 of the Revised Telecommunications Business Law Enforcement Regulations, companies that provide telecommunications services falling under any of the following categories to meet the needs of third parties are subject to the new cookie regulation:

• Services that enable message exchanges between users.
• Services that facilitate sending user-uploaded data to unspecified users upon request, such as social networking services and video-sharing platforms.
• Web search services.
• Other services that transmit data to unspecified users upon request and are intended to be viewed by unspecified users.

To clarify, corporate websites or blogs not designed to meet the needs of third parties will not be subject to the cookie regulation. However, nearly all other types of websites or online services will be affected, such as booking services, job matching platforms, apartment search services, online games, news websites, weather websites, and more.

2. Cookies subject to the new cookie regulation

Per Article 22-2-30 of the Revised Telecommunications Business Law Enforcement Regulations, the following types of cookies are exempt from the new cookie obligations:

• Information essential for providing the service.
• Information required to redisplay user-entered information, including authentication data.
• Information necessary for detecting fraudulent activities and minimizing damage.
• Information crucial for the proper operation of the server.

In other words, the new regulation primarily pertains to third-party cookies (i.e., cookies created by a domain other than the one the user is visiting). However, first-party cookies (i.e., cookies created by the domain the user is visiting) may also be subject to the new regulation if they are not genuinely necessary for the operation of the service (e.g., the use of Google Analytics).

3. Content of the obligations under the new cookie regulation

Businesses subject to the cookie regulation must take one of the following measures when using cookies subject to the regulation:

• Notify users of the following information or make this information readily available to users before requesting any transfer of user information (Article 27-2 of the Telecommunications Business Act):
• The nature of “information about the user.”
• The name of the person processing “information about the user” using the destination server.
• The purpose of using “information about the user” by the data processor.
• Obtain user consent regarding the transfer of their information (Article 27-12-3 of the Telecommunications Business Act).
• Provide an opt-out mechanism for users (Article 27-12-4 of the Telecommunications Business Act).

4. Measures to be taken by businesses

To ensure compliance with the applicable regulation, we recommend the following:

• Verify if your business offers services subject to the new cookie regulation.
• Check whether you collect cookies subject to the regulation and review their nature, the name of the data processor, and the purpose of using such information.
• Amend your cookie policy or terms of use to comply with the cookie regulation, if necessary, and ensure your users’ consent form or opt-out mechanism complies with the requirements of the cookie regulation.

Mina Ishikawa

 

OUR LATEST DEAL

Alan Allman Associates

LPA Singapore advised Alan Allman Associates with its acquisition of the Asian branch of an international IT consulting Group. Allan Allman Associates is specialized in 4 areas: high-tech consulting, industrial transformation consulting, digital marketing consulting and strategy and management consulting. This acquisition marks a significant milestone in the ongoing expansion strategy of the group. LinkedIn

 

NEWS FROM LPA

Team | Henrick Emeriau has been appointed as partner at LPA-CGR avocats Shanghai office. The firm thus strengthens its positioning on the France-China axis, which it has developing since 2008. Henrick has developed expertise in both advisory and litigation work, mainly in corporate law, mergers & acquisitions and commercial law. LinkedIn

Ranking | Our 4 offices in Asia, LPA Hong Kong, LPA Shanghai, LPA Singapore and LPA Tokyo, have been awarded in 2023 in the M&A and M&A Foreign categories, and 6 partners and 1 lawyer have been individually ranked by IFLR1000 Asia Pacific guide. LinkedIn

Celebration | LPA Tokyo celebrated its ten-year anniversary on 28th September 2023 at the French Residence in Tokyo. 140 guests attended the reception, including His Excellency, Philippe Setton, French Ambassador of France to Japan, as well as members of parliament, the Chairman of the Tokyo Daini Bar Association, CEOs, artists, photographers, novelists, musicians and partners from LPA-CGR avocats offices in Paris, Hong Kong and Singapore! LinkedIn

Upcoming event | Join our experts from LPA-CGR avocats, Fanny Nguyen, local partner at the Shanghai office, Estelle Chen, lawyer at the Shanghai office, Emilien Vivier, lawyer at the Paris office, and Malik Dif, Director of Equance – International Private Wealth Management office in Hong Kong at the conference organized by the CCI FRANCE CHINA in Shanghai on the topic: discover insights and winning strategies for optimizing your wealth from China and Hong Kong  on Thursday, October 26, 2023 (hybrid event in French 8:00 – 10:00am Shanghai time). Register by clicking here

Upcoming event | “Everything you always wanted to know about Doing business in Hong Kong”, join Nicolas Vanderchmitt, managing Partner of LPA-CGR avocats Hong Kong office, and Fabrice Turries, Partner at Palazzari & Turries, for this interactive session organized by the French Chamber in Hong Kong, and dedicated to doing business in Hong Kong (in English) on Thursday, October 26, 2023 (8:30 – 10:00am HK time). During this physical event, you will learn how to successfully establish and operate a business in Hong Kong, while also gaining insights and tips about legal foundations, employment, taxation, compliance, and intellectual property. Register by clicking here

Upcoming event | The LPA-CGR avocats’ representatives will be attending the International Bar Association Annual Conference which will be held in Paris from 29 October to 3 November at the Palais des Congrès. Our team will be delighted to meet and (re)connect with our international friends and peers, as well as develop new business relationships. Contact us and meet our teams! LinkedIn

Upcoming event | “French expats in Singapore: How to invest, protect, transmit?” Join our experts Sabrine Cazorla Reverre, of counsel, Head of Family and Estate practice at LPA Singapore, Chloé Vasseur, Head of Wealth Planning and Life Insurance services at Banque Transatlantique Luxembourg, and Elodie Letouche, Civil Law Notary & International consultant, on Tuesday, November 14, 2023 for an informational meeting co-organized with the support of UFE (Union des Français de l’étranger) on the topic of family and estate (physical event in French starting at 6:30 pm Singapore time). The conference will be followed by a networking cocktail. Register by clicking here

Past event | Nicolas Vanderchmitt, managing partner of LPA-CGR avocats Hong Kong office, has been invited by HKTDC Paris to speak on the panel “How French companies can tap into exciting business prospects in Asia and the Greater Bay Area region through Hong Kong?”, alongside esteemed panelists, at the “Think Business Think Hong Kong” symposium held at the Carrousel du Louvre in Paris on September 23, 2023. More than 1,000 business leaders and entrepreneurs attended this successful event and explored various avenues for collaboration between France and Hong Kong. LinkedIn

Past event | Arnaud Bourrut-Lacouture, partner and co-founder of LPA Singapore, had the privilege to speak, alongside esteemed panelists, at the 9th edition of BIG, Europe’s largest business gathering organized by Bpifrance, on the Asian panel for a session in French dedicated to M&A in Asia. This conference, held in Paris on October 5th, was an excellent opportunity to discover insights, best practices, and pitfalls to avoid when conducting operations in Asia. LinkedIn

Partnership | LPA-CGR avocats is delighted to announce its partnership with Coryllis by Expansio, a digital platform dedicated to French companies with international projects. This platform aims to connect French experts worldwide with French businesses looking to expand globally. Visit our digital booth and connect with our LPA-CGR team in Asia by clicking here